Banking
Fitch Downgrades Union Bank’s National Rating to ‘BBB-(nga)’
By Dipo Olowookere
The National Long-Term Rating of Union Bank of Nigeria Plc’s BBB(nga) has been downgraded to BBB-(nga) by Fitch Ratings.
In a statement issued by the rating agency, it however, said the lender’s Long-Term Issuer Default Rating (IDR) has been affirmed at ‘B-‘ with stable outlook.
Fitch said the downgrade of Union Bank’s National Long-Term Rating mainly reflects its view of weaker asset quality relative to Nigerian peers’, as highlighted by the bank’s disclosure under IFRS 9.
According to the statement released on Tuesday, the rating company said the IDRs of Union Bank are driven by its standalone creditworthiness, as defined by its Viability Rating (VR).
Union Bank’s VR, as with that of other Nigerian banks, is highly conditioned by Nigeria’s operating environment, with the fragile economic recovery restraining banks’ growth prospects and asset quality, Fitch said.
It added that the financial institution’s VR further reflects a moderate franchise, weak profitability, severe loan-quality problems and adequate capitalisation, funding and liquidity.
However, it noted that the stable outlook reflects Fitch’s base case expectation that Union Bank’s credit profile is unlikely to change significantly over the next one-to-two years.
Union Bank’s operations are concentrated in Nigeria and the lender accounted for 4 percent of banking system assets at end-2017.
Union Bank’s stock of impaired loans is declining, the statement noted, as is its exposure to the troubled oil sector. However, the bank’s impaired loans (stage 3 loans under IFRS 9) ratio (24% at end-1H18) is very high compared with the 9.4% average for rated Nigerian banks, driven primarily by its oil sector exposure, it added. Stage 2 loans measured at a further 30 percent of gross loans at end-1H18. Reserve coverage of impaired loans (32% at end-1H18) is low, reflecting management’s view of collateral on impaired loans, Fitch said.
Furthermore, the rating firm said Union Bank is exposed to large credit concentrations. The 20-largest loans measured at 71 percent of gross loans and 128 percent of Fitch Core Capital (FCC) at end-1H18. The volatile oil sector represented 45 percent of Union Bank’s gross loans at end-1H18.
Union Bank’s operating profit/risk-weighted assets ratio was 1.8 percent in 2017 (compared with rated-banks average of 4 percent), which is weak by emerging market standards.
The bank has a high net interest margin, but this is offset by a high cost-income ratio and large loan impairment charges that have eroded around 55 percent to 65 percent of pre-impairment operating profit in recent years.
Capital metrics are somewhat better than similarly-sized peers’, having improved following a rights issue in 2017, Fitch said. However, as a result of IFRS 9 implementation from this year, Union Bank’s FCC ratio declined to 24 percent at end-1H18 (end-2017: 31 percent), the company added.
Union Bank’s high FCC ratio must be considered in the context of the bank’s large unreserved impaired loans, which measured at 45 percent of FCC at end-1H18.
Union Bank benefits from a strong retail deposit base, which accounted for 52 percent of customer deposits at end-1H18, providing an inexpensive source of stable funding. Single-depositor concentration is in line with peers’, with Union’s 20-largest deposits accounting for 21% of the total at end-1H18. Union Bank’s loans/customer deposits ratio (62 percent at end-1H18) sits at the lower end of the peer group.
Foreign-currency liquidity has been tight in recent years, with Union Bank restructuring some trade finance obligations with international correspondent banks in 2015 and 2016. Foreign-currency liquidity pressures have eased and are no longer a significant rating weakness.
Fitch said it believes that sovereign support to Nigerian banks cannot be relied upon given Nigeria’s weak ability to provide support, particularly in foreign currency. In addition, it said there are no clear messages of support from the authorities regarding their willingness to support the banking system.
“Therefore, the Support Rating (SR) and Support Rating Floor (SRF) are ‘5’ and ‘No Floor’, respectively. This reflects our view that senior creditors cannot rely on receiving full and timely extraordinary support from the Nigerian sovereign if any of the banks become non-viable,” the statement said.
It further noted that Union Bank’s Long-Term IDR is sensitive to a change in the bank’s VR. Downside pressure is most likely to result from a material worsening of impaired loans, including the migration of stage 2 loans into the stage 3 category, putting pressure on capital adequacy. A positive rating action is unlikely in the foreseeable future.
“Union’s National Ratings are sensitive to a change in the bank’s creditworthiness relative to Nigerian peers,” the statement said.
By Modupe Gbadeyanka
About N2 billion is expected to be used to finance renewable energy products for customers by the end of 2026 in an effort to accelerate Nigeria’s clean energy transition.
To meet this goal, Sterling Bank is launching Sterling Solar Financing Hubs inside StarTimes retail outlets to embed on-the-spot solar financing at the point of purchase.
From the N2 billion earmarked for this initiative, N600 million has already been used up.
Under this programme, customers can now walk into participating outlets, select their preferred solar solution, receive financial guidance from dedicated Sterling Solar Financing Advisors, and begin the financing process immediately, subject to the bank’s credit assessment.
The first phase of the rollout commenced this July with five Solar Financing Hubs across Lagos, located in Lekki, Ikeja, Festac, Surulere, and Victoria Island.
The network will expand rapidly to 46 StarTimes outlets nationwide before the end of the third quarter of 2026, with a view to extending the model to more than 200 StarTimes locations nationwide.
Both parties have promised to continue working together to democratise access to clean energy financing, empowering more Nigerians to solarise their homes and businesses while contributing to a greener future.
“Sterling exists to enrich lives, and we believe that access to clean, reliable energy should be within everyone’s reach. Through this partnership with StarTimes, we are democratising access to solar by bringing financing directly to the point of need, enabling more families and businesses to transition to sustainable energy without the burden of prohibitive upfront costs. This is about unlocking opportunity, improving livelihoods, and powering Nigeria’s future,” the Divisional Head of Renewable Energy and Mobility at Sterling Bank, Mr Darlington Nwankwo, said.
Also commenting, the Vice President of StarTimes Nigeria, Mr Eric Xiao, said, “With the rollout of the Sterling Solar Financing Hubs, we are doing more than just selling solar products; we are building a sustainable energy ecosystem. By integrating StarTimes’ extensive service network with Sterling Bank’s professional financial services, we are significantly lowering the barrier for Nigerian households and small businesses to access clean energy.
“Moving forward, we will continue to deepen this partnership, ensuring that more Nigerians can enjoy reliable, affordable, and smart energy solutions, ultimately turning our vision of energy accessibility into a reality for all.”
By Modupe Gbadeyanka
The Nigeria Business Summit Regional Tour of Stanbic IBTC Bank made a detour to Jogor Centre, Ibadan, Oyo State, on Wednesday, July 15, 2026, to empower Micro, Small, and Medium Enterprises (MSMEs).
The event brought together business leaders, development partners and government representatives to discuss pathways for sustainable enterprise development across the South-West.
Participants engaged in practical masterclasses on export opportunities; access to finance and business growth strategies; gaining actionable insights into market expansion; trade documentation; credit readiness; financial record-keeping; and structured financing solutions designed to support long-term business success.
The Head of Enterprise Banking at Stanbic IBTC Bank, Ms Olajumoke Bello, informed participants that the programme is part of the lender’s commitments to supporting MSMEs through practical business education, strategic partnerships and improved access to growth opportunities.
The Executive Director of Business and Commercial Banking at Stanbic IBTC Bank, Mr Remy Osuagwu, on his part, said, “Our ambition is to be more than a financial institution to Nigerian businesses. We want to be a trusted growth partner, providing the financing, business insights and advisory support entrepreneurs need to build sustainable enterprises and unlock new opportunities.”
Similarly, the chief executive of Stanbic IBTC Bank, Mr Wole Adeniyi, who reinforced the company’s commitment to enterprise development, highlighted the importance of providing businesses with the right support structures to enable sustainable growth and long-term competitiveness.
“At Stanbic IBTC, we believe that sustainable economic growth depends on the success of small and growing businesses. That is why we are focused on providing access to finance, practical advisory support and the connections businesses need to move from ambition to scale,” he stated.
The Oyo State Commissioner for Investment, Trade, Cooperatives, and Industry, Professor Soliu Adelabu, said the initiative was designed to support businesses and strengthen the state’s entrepreneurship ecosystem, praising the bank for its support for traders, entrepreneurs, and artisans in the state.
The Permanent Secretary in the Oyo State Ministry of Women Affairs and Social Inclusion, Mrs O.M. Shotonwa-Roagess, highlighted the importance of strategic partnerships in expanding economic opportunities for women and vulnerable groups across Oyo State. She noted that the ministry remains open to collaborating with organisations such as Stanbic IBTC, development partners and the private sector to drive financial inclusion, entrepreneurship and sustainable economic empowerment.
The Nigeria Business Summit Regional Tour forms part of Stanbic IBTC’s broader commitment to empowering entrepreneurs through capacity building, financial inclusion and strategic business support, helping enterprises unlock new opportunities for growth and long-term success.
The Ibadan leg built on the momentum of previous tour stops in Katsina and Aba.
By Adedapo Adesanya
The Governor of the Central Bank of Nigeria (CBN), Mr Yemi Cardoso, says Nigeria anticipates remittances from citizens living abroad to increase by two-thirds in 2026 as it seeks to bolster its foreign-exchange reserves to $1 billion monthly.
“We are expecting that by the end of the year, we will hit about a billion Dollars a month from diaspora remittances,” he said at the 14th Annual BusinessDay CEO Forum in Lagos on Thursday, themed From Stability to Shared Prosperity.
Mr Cardoso said remittances are expected to be boosted from more than $600 million currently, banking on the CBN’s deliberate target at remittances to diversify reserve sources beyond oil earnings.
According to him, the apex bank engaged Nigerians abroad, banks and international partners to identify barriers to official remittance flows.
He said the lender subsequently reviewed policies to ensure easier movement of funds into and out of the country.
Mr Cardoso described the approach as providing free entry and free exit for foreign exchange.
He said the reforms helped double diaspora inflows within one year and exceeded initial expectations, also projecting annual remittances could reach about $8 billion if the current momentum was sustained, adding that the development reflected growing confidence in Nigeria’s financial system and foreign exchange market.
Mr Cardoso said reforms introduced by the apex bank had restored stability in the foreign exchange market and improved investors’ confidence.
He identified exchange rate unification as one of the central bank’s major achievements under the reforms programme.
According to him, replacing multiple exchange rate windows with a market-driven system eliminated distortions and improved transparency.
Mr Cardoso said improved foreign exchange liquidity and stronger reserves were among the gains from the reforms.
He said Nigeria’s net external reserves had risen from about $3 billion at the start of the reforms to above $40 billion currently, noting that gross external reserves had grown to about $52 billion, representing about 10 months of import cover.
According to him, the reserves are designed to shield the economy from external shocks and excessive market volatility.
He said the reserves were not meant for routine interventions or day-to-day exchange rate management.
